Tuesday, February 01, 2005

"And Huawei is not the only telecom and networking equipment maker charging out of China. Huawei's chief domestic competitor, ZTE, doubled its international sales in 2003 to $610 million. FiberHome Technologies Group, a commercial arm of a Chinese national research center that makes optical fiber cables and gear, gained major contracts last year in India, Iran and Australia. And analysts say that the next Chinese company likely to branch out into the global market is Harbour Networks, founded by former Huawei employees to develop next-generation data networking equipment. "

"The Huawei threat comes not from low-cost manufacturing—which is now a given throughout the industry—but from low-cost engineering. Huawei has an R&D work force of more than 10,000 people, many of whom have master's or Ph.D. degrees and whose salaries are one third to one fifth those of their Silicon Valley counterparts."

"Asking what Huawei's U.S. and European rivals can do to fend off the Chinese "is like asking what American consumer electronics companies could do when faced with the onslaught of Japanese technology in the 1970s," says Zeus Kerravala, an analyst at the Yankee Group in Boston. "Some loss of business is inevitable. It's just cheaper to do engineering over there," he adds. " Read more